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As long as you intend to own your property past that break-even period, refinancing can be a smart move.
Some people don't like the idea of "starting over" on a new loan for fear of having a longer total time period to pay. In actuality, missing the chance to
refinance when rates are lower means that you would simply have no choice but to continue paying the same amount each month that you are currently.
Instead of doing nothing, why not take advantage of the lower rate and then continue to make the same payment that you are now anyway?
Why?
Because what actually happens in this instance is that you shorten the term of the new loan to less than what you have remaining on the current
and save substantially as a result. All with making the same payment you are right now. In other words, pay the same, save more and own your home sooner.
The "Pre-Payment Analysis" provides an example of how extra added principal payments will shorten your loan:
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As you can see, there's more to refinancing than just looking at the interest rate or the amount of money spent or the fear of starting over with a new loan.
The total amount of payments saved and getting to the point of owning your home "free and clear" really represent the more important factors. There are
even other more sophisticated concepts that can be involved such as deciding if you really want to take the savings and invest it in paying down the balance
more quickly as there are many instances in which applying that savings towards other investments can actually go beyond even the total payment savings
figure above. However, this all starts with this analysis and I'm happy to have made it available to you. We can discuss your options and specifics at any time
and all you ever have to do is reach out using the information at the top of this form.
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